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Prosper, one of the leading Peer-to-Peer lending companies on the net, has been sent a Cease and Desist letter from the SEC. The decision came down this week, but they had not been "making new loans" for the past several weeks.

Prosper which is a P2P Lending Marketing [as opposed to a bank or financial institution], but the SEC views Prosper [and other P2P Lending companies, such as Loanio and Lending Club] as "sellers of investments" - in other words they are securities company, and under the oversight and governance of the SEC.

We can get into what the SEC said in their letter, but my suggestion is if you're interested, do a web search - because this is going to be a hot topic [maybe somewhat under the radar, but it will be debated amount bloggers and those interested in the internet].

Regardless of where you fall - are they are aren't they - it is disturbing that while we are handing BILLIONs of TAX DOLLARs to the largest financial institutions, we are also stopping innovation. P2P lending will never be as big as "bank sponsored personal and commercial" lending - because the majority of people avoid risking their money at all costs [part of the reason why the recent financial crisis is so hard on most people]. But those willing to risk $50 here and $100 there, to help someone out -- should not be "stopped".

Propser, Loanio, and Lending Club were at the forefront of a new way to view borrowing and lending of money. And I hope they figure out a way to circumvent the SEC and the established financial world. Only time will tell.